Trump Admin to Pause Collection of Defaulted Federal Student Loans, Refund $1.8 Billion

Borrowers who fall behind on federal student loan debt payments will receive temporary relief, as the Trump administration is putting a stop to its collection efforts amid the ongoing national emergency.

According to a new directory released on Wednesday, the U.S. Department of Education will stop referring defaulted student loan borrowers to the U.S. Department of Treasury, which has the authority of seizing the borrowers federal income tax refunds and Social Security payments, and applying those witholdings toward loan repayments. The pause on collection will last for at least 60 days from March 13, when President Donald Trump declared a national emergency.

For more than 830,000 borrowers whose federal tax refunds were in the process of being seized on March 13, they will receive a refund totalling $1.8 billion.

In addition, private collection agencies working for the federal government have been instructed to pause their “proactive collection activities,” such as making phone calls and sending collection letters to borrowers.

“These are difficult times for many Americans, and we dont want to do anything that will make it harder for them to make ends meet or create additional stress,” said U.S. Secretary of Education Betsy DeVos in a press release. “Americans counting on their tax refund or Social Security check to make ends meet during this national emergency should receive those funds, and our actions today will make sure they do.”

During this #COVID19 national emergency, Ive put a stop to all collections actions & wage garnishments for student loan borrowers in default and have asked @usedgov to refund $1.8B to 830,000 borrowers who had wages/tax refunds garnished since March 13: https://t.co/UasAEfFdaw

— Secretary Betsy DeVos (@BetsyDeVosED) Read More – Source

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